DEALBOOK EXTRA

By STEVEN M. DAVIDOFF, CYRUS SANATI and MICHAEL J. de la MERCED

Published: May 2, 2008

Many people spun this week's $23 billion Mars-Wm. Wrigley Jr. deal as a strategic transaction done as a leveraged buyout. They are more right than they knew.

The merger agreement was filed by the parties on Wednesday. It disclosed that the Wrigley-Mars transaction is structured as a private equity leveraged buyout with a reverse termination fee structure.

True to the most optional form of this type of transaction, the merger agreement caps Mars' maximum liability at $1 billion and bars specific performance. The effect is to give Mars a walk right from the transaction at any time, so long as it pays Wrigley $1 billion.

The fee is payable if Mars simply breaches the agreement and decides to walk or otherwise in other circumstances where the transaction fails to obtain antitrust approvals. The structure in this deal is the private equity model on prominent display in various failed buyouts in the past nine months.

Mars undoubtedly argued that in today's credit market it would be foolish to take the full financing risk on this deal. And Wrigley went along.

Why? Well, this is a deal that is probably being done more on the ability of the parties to work together rather than anything else. Wrigley's is being kept as a stand-alone corporate unit. Bill Wrigley Jr. is going to head it, and the Wrigley press release talked about preserving the Wrigley tradition.

Wrigley has most likely grown comfortable with the Mars people and decided that if Mars doesn't want to do this transaction, so be it. Moreover, given the markets this may have been the best deal Wrigley could get, and the premium was large.

And to assuage Wrigley a bit, Mars agreed to a higher-than-normal reverse termination fee of about 4.5 percent of equity deal value. This may also explain why there is no lock-up of the Wrigley family shares on the deal. The parties recognize that this deal will be done only if it makes social sense. STEVEN M. DAVIDOFF

Dissing Dubai

Andrew L. Stern, the president of the Service Employee International Union, probably is not planning his next vacation amid the soulless skyscrapers and palm-shaped artificial islands of Dubai.

After all, Mr. Stern's union, which represents 1.9 million workers, has been a strong critic of the human rights record of the United Arab Emirates, of which Dubai is one. In fact, his union has highlighted connections between the emirates and firms like the Carlyle Group as part of its very public critique of the private equity business.

So it seems a bit ironic that Mr. Stern is set to speak this month at The New Yorker Conference, one of whose sponsors is -- you guessed it -- the tourism board of the government of Dubai. Dubai is just one of the event's sponsors, which include Dow and CIT Group.

But Mr. Stern's union has been quite exacting in its view that even a minority stake matters, as shown by its criticism of last year's $1.35 billion deal in which Abu Dhabi, the capital of the United Arab Emirates, bought 7.5 percent of Carlyle. (''Carlyle's 'see-no-evil' approach to its business dealings with Abu Dhabi undermines efforts to improve respect for human rights there,'' the union said in a press release in December.)

Service Employees International even helped sponsor a bill in California that would bar public pension funds from investing in companies that deal with sovereign wealth funds. The text of the bill specifically mentioned Abu Dhabi.

Officials from the California Public Employees' Retirement System, or Calpers -- which itself owns 5 percent of Carlyle -- had said the measure would cost them billions of dollars in missed investment opportunities. The bill has since been withdrawn, without making it to a vote in committee.

CYRUS SANATI Milken's Ball

The Milken Institute's Global Conference in Los Angeles ended Wednesday after three days of newsmakers sweeping through the halls of the Beverly Hilton.

Among the highlights, Kenneth C. Griffin, founder of Citadel Investment Group, hinted his firm might go public; Leon D. Black of Apollo Management declared the worst may be over; and Eric E. Schmidt of Google railed against the possibility of a Microsoft-Yahoo tie-up.

For the Wall Street crowd, the hottest ticket was a party hosted by Joe Reece, managing director at Credit Suisse, at Mastro's Steakhouse.

Amid the recent commodities boom that has fueled a surge in consolidation in the industry, Alcoa announced Thursday that it has hired a longtime outside adviser to head up its mergers and acquisitions efforts.

J. Michael Schell, below, most recently a vice chairman of global banking at Citigroup, will take the title of executive vice president for business development and law, assuming responsibility for Alcoa's corporate development and legal issues.

As rising commodities prices have strengthened the hands of many of its rivals, Alcoa appears to be looking to deal-making as a defensive maneuver.

The world's biggest mining giants -- the Anglo-Australian companies Rio Tinto and BHP Billiton and the Brazilian producer Companhia Vale do Rio Doce -- have snapped up many smaller companies over the past two years, leaving Alcoa in what some analysts say is a weaker position.

Last year, Alcoa mounted an unsuccessful hostile bid for Alcan; the Canadian aluminum miner instead accepted a higher offer from Rio Tinto.

But Alcoa found success this year.

It partnered with the Aluminum Corporation of China to buy a 9 percent stake in Rio Tinto, which has rebuffed an unsolicited offer from BHP Billiton.

''Mike's worked on most of the successful acquisitions in Alcoa's recent history and brings wide-ranging experience in cross-border M&A expertise to the company, making him the ideal candidate for this important role,'' Alain J. P. Belda, Alcoa's chief executive, said in a statement.